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CandW discuss Netflix Q1 2018 and Amazon-BestBuy frenemy alliance

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Netflix had another stellar quarter in Q1 2018, and we discuss why. Amazon and BestBuy are partnering on smart TVs. We look at why the two retail foes are working together.

Chapter 1: Netflix stellar Q1 2018 (1:30

Netflix exceeded its own and many analyst forecasts for subscriber growth in the Q1 2018. In Q4 2017, the company said it would add 1.45 million U.S. subscribers and 4.9 million international customers. It delivered 1.96 million U.S. and 5.46 million international subscribers. The company now has 125 million global subscribers, with 56.7 million in the U.S. and 68.3 million in international markets.

One of the chief engines for growth is the huge amount Netflix continues to spend on content. The company says it will direct an increasing amount of the $8B it will spend in 2018 toward original content.

Another engine for growth is the smart partnerships the company is making. It expanded its relationship with Comcast last week. Currently, the Netflix app is available on the X1 STB as a standalone purchase. Comcast will also add Netflix to a bundle of pay TV channels.

Chapter 2: Netflix cinema positioning and SVOD outlook (9:40)

Ted Sarandos, Netflix Chief Content Officer, continues to take an aggressive stance toward the movie industry. He says the company does not care which screen customers use to watch movies. His only concern is that they be great.  The remark is almost certainly a swipe at the Cannes Board which banned Netflix from the competition this year.

Reed Hastings, Netflix CEO thinks that the video app ecosystem will end up looking very much like the mobile app ecosystem. Neither Will nor I am expecting there to be tens of thousands of video apps.

Chapter 3: Amazon and BestBuy alliance (13:00)

Will lays out the details of the unlikely partnership between Amazon is making retail rival Best Buy. Best Buy will introduce more than ten 4K and HD “Fire TV Edition” TVs from Toshiba this summer and in-house brand Insignia later this year. Best Buy will end its existing smart TV deal with Roku for its Insignia line of TVs later this year. Amazon will also end its existing Fire TV Edition deal with smart TV maker Element.

I wondered if some of these new TVs would show up on Amazon cheaper than in BestBuy stores. However, Will says the new Fire TV Edition TVs will be sold exclusively in Best Buy physical stores, on BestBuy.com, and from Best Buy as a third-party seller on Amazon.

Chapter 4: How many prime video users are there? (17:30)

Amazon’s CEO Jeff Bezos says the company has over 100 million Prime members. I cite some data that suggests something like 50 million U.S. Prime subscribers also watch video on the service.

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